Securities and Exchange Board of India Vs Rajkumar Nagpal & Ors. (Supreme Court of India)
Summary: The dispute concerned the applicability of the Securities and Exchange Board of India (SEBI) circular dated 13 October 2020 prescribing the procedure to be followed by Debenture Trustees in cases of default by issuers of listed debt securities.
Reliance Commercial Finance Limited (RCFL) had issued Non-Convertible Debentures and Vistra ITCL (India) Limited was appointed as Debenture Trustee under three Debenture Trust Deeds dated 3 May 2017, 23 May 2017 and 5 February 2018. RCFL committed its first default under the Debenture Trust Deeds in March 2019. Thereafter, the Reserve Bank of India issued the SEBI (Debenture Trustees) Regulations, 1993-related regulatory framework and, on 7 June 2019, issued the Reserve Bank of India (Prudential Framework for the Resolution of Stressed Assets) Directions 2019. Bank of Baroda and other lenders of RCFL subsequently entered into an inter-creditor agreement.
SEBI issued its circular on 13 October 2020 concerning standardisation of the procedure to be followed by Debenture Trustees in cases of default by issuers of listed debt securities. RCFL and Vistra later executed a Supplementary Debenture Trust Deed on 11 March 2021 taking note of the SEBI circular. On 15 July 2021, the Resolution Plan submitted by Authum Investment and Infrastructure Limited was approved by RCFL’s lenders.
